Challenges face prospect for new US northeast cracker

10 May 2011 19:11  [Source: ICIS news]

PITTSBURGH, Pennsylvania (ICIS)--There are prospects for a new steam cracker in the northeast US, a top energy sector analyst said on Tuesday, but such a project also faces cost and environmental challenges.

Kristen Holmquist, manager of energy analysis at Bentek Energy in Evergreen, Colorado, told a chemicals sector conference that certain advantages support recent speculation about a new greenfield cracker in the northeast.

Speculation about a new cracker in the northeast has grown as the supply of natural gas from the Marcellus shale play has increased exponentially over the last year.

That, said Holmquist, is the principal driver for a new northeast cracker, “immediate access to ethane from the Marcellus play”.

In addition, she said, a new cracker in the northeast would allow displacement of shipments from the US Gulf coast, where some 60% of US petrochemicals production capacity is located.

A new northeast cracker would likely be sited in either Pennsylvania - the state with the largest Marcellus shale gas output - or perhaps West Virginia.

West Virginia Governor Earl Tomblin has established a special task force regarding a new cracker in his state, saying the facility would bring an economic boom.

But Holmquist said that there would be challenges to a new northeast cracker.

“The location, the northeast, is not a typical building place for petrochemical plants,” she noted, suggesting that their might be some local opposition.

In addition, she said that to obtain real advantage from the nearby shale-gas-ethane feedstock, a producer likely would want to convert ethane to plastics, “which would require investment in a world-scale cracker complex”.

That in turn would increase the cost of the investment and the level of returns needed to justify the investment,” she said.

Holmquist spoke at the annual Pittsburgh Chemical Day.

By: Joe Kamalick
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